Madoff scandal hits Berman Foundation

The Lehigh Valley's largest Jewish charity has lost money in the Bernard Madoff investment scandal, but officials with the Philip and Muriel Berman Foundation say they won't reduce their aid to local charities this funding year.

Nancy Berman, whose late parents owned Hess's Department Store and started what became a $42 million foundation, said the fund had an undisclosed amount of money indirectly invested through Madoff.

Two weeks ago, federal authorities arrested Madoff, the former Nasdaq stock market chairman, on charges he squandered $50 billion of people's investments in a pyramid scheme.

The foundation will follow through with more than $600,000 in charitable giving through May, but the scandal, along with the economic downturn, could affect giving in future years, said Nancy Berman, the foundation's president.

"As far as we know now, it's not devastating to the foundation, but it has been affected,"

Berman said Monday from her business near Los Angeles. "We feel hurt and damaged that something like this could happen."

Madoff was charged by the U.S. Securities and Exchange Commission with taking billions of dollars of other people's money and, rather than investing it, paying it to previous investors in what regulators say was a giant Ponzi scheme.

Many of the investors allegedly swindled by Madoff are, like him, Jewish, and for many of them contributing to Jewish causes is a crucial part of their culture. Some foundations that invested with Madoff say they'll have to fold.

Though Berman said it's unclear how much has been lost, she said the Berman Foundation will survive. The Allentown nonprofit was started after the death of her parents, Philip and Muriel Berman, who once owned several trucking companies and Allen Electric Co., in addition to Hess's.

According to its most recent tax forms, the foundation has $42 million in assets and has given nearly $8 million over the past three years to charities around the world, including Lehigh Valley Hospital, Lehigh University, the Allentown Symphony and Congregation Keneseth Israel in Allentown.

Though many of the foundation's gifts are smaller annual stipends to local charities, perhaps its most prominent gifts are the $6.5 million Alexander Calder sculpture in Jerusalem and the three-story mural on Allentown Symphony Hall.

"Due to this unexpected loss and the sharp downturn in market values, the foundation is re-examining its near-term giving priorities," Berman and her husband, Alan Bloch, said in a written statement. "It is our intention to complete multiyear commitments already in existence."

It's a re-examination going on throughout the Jewish philanthropic world, where losses blamed on Madoff are already approaching $1 billion, according to Jewish philanthropy experts.

Time will tell how much of that loss will trickle into the Lehigh Valley.

"I know the mural on our building was the vision of Mr. Berman, and it really has beautified that part of the town," said Maureen Joly, development director for the Allentown Symphony. "We're all grateful for what they've done all over the city."

Berman said she wasn't aware the foundation was invested through Madoff because it was done indirectly, through a fund manager. She said the loss doesn't threaten the foundation, which has several fund managers.

Berman said she hopes to continue giving on the same level, but acknowledged such philanthropy hinges on future performance of the fund.

"We intend to do whatever we can to continue at current levels," Berman said. "With all that has happened recently, the need is greater than ever."

BERMAN FOUNDATION GIFTS

The Philip and Muriel Berman Foundation gives annually to charities across the Lehigh Valley and the world. Here's a look at some of its largest gifts since 2004, according to its most recent tax forms:

6.5 million: For the Alexander Calder sculpture in Jerusalem.

450,000: To the New York-based American Friends of the Tel Aviv Museum.

250,000: To the Public Art Foundation, for a sculpture in Hamilton, N.J.

106,000: Hadassah, the Women's Zionist Organization of America, New York City, for the school of nursing.